Forex Asia Review – Pre-weekend light volumes resulted in lackluster session

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EURUSD opened in Asia at 1.4240 after moving up from the previous New York session but fell from that peak to reverse direction to fall to 1.4170, mostly due to profit taking ahead of the weekend. Yesterday the euro gained momentum against the dollar after a report showed declining U.S. jobless claims, which added some optimism that the U.S. economy is strengthening. However, the market is not too confident yet as eurozone banking concerns still linger, and some weak French economic data this morning did not help sentiment.

 

GBPUSD opened in Asia at 1.6235 after rising all day yesterday from a low 1.6108, lifted by improved market sentiment and fewer concerns over US growth following better than expected US jobless claims EURGBP opened at 0.8772 and fell to 0.8743 in line with a weaker euro.

 

USDJPY was mostly flat during the session. The upcoming weekend and the major Japan Obon holiday resulted in light volumes. Traders are taking it easy after a volatile day yesterday and are also holding off from large purchases as they are still fearing a market intervention by the Bank of Japan if yen gains too much strength. On August 4 BOJ intervened to curb yen appreciation. USDJPY traded the session in a tight range between 76.74 and 77.00.

 

USDCHF eased off from an early high of 0.7640 to 0.7586. EURCHF also fell off from 1.0881 to 1.0755. After a huge surge in both euro and dollar against the Swiss franc yesterday, due to the SNB warning that they will take measures to stem the franc strength, both pairs were due for some correction as traders adjust positions ahead of the weekend.

 

The Australian dollar was slightly weaker in Asia despite rallying in the previous North American session on improved sentiment from both the US and Europe as equity markets picked up. Yesterday the aussie gained over 200 pips on the day, aided by the stronger Chinese Yuan. China is a major trading partner of Australia. Pre-weekend fatigue and lack of economic data today called for light trading. AUDUSD opened at 1.0349 and closed the session at 1.0274.